For those of you with student loans, how did you go about paying them off, did you pay them slowly each month or did you wait till your year end bonus to pay most of it off. For context I have about ~50k in loans and I’m an inc IB analyst 1 at BB. Just wondering if someone was in a similar situation as me.
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I had a much smaller amount of loans, but I have always liked the idea of debts going down incrementally so I always paid $500 a month. I know they will probably be some people who say don't pay them off - there will be forgiveness, but if we are being honest - it is probably not going to effect you. Also go forbid that you don't get a bonus - (layoffs, firing, etc.) then you will have made a dent with your great salary ahead of time.
Yea that sounds like the smart thing to do, I was planing on doing around that much
I personally just find it satisfying to watch the balance go down
In same position as you but with 1.5x amount in loans. Plan is to pay around $1k a month (both principal and interest) and each bonus take a large chunk to pay down.
How fast do you want to pay it off?
If they are a federal, don’t pay or at most do the minimum. Not sure how many times I have to say this but the writing is on the wall that there will be either be some form of forgiveness or the debt will be inflated away. There’s no other option. Everyone is looking the wrong direction for a bubble. It’s this.
That’s fine if you want to pay for psychological reasons but don’t be the same crabby person who comes in here later and whines about how it’s “unfair” that any debt is forgiven/inflated away in a global bust when you paid it off. It couldn’t have been clearer. You know what’s also unfair? Having to slave your whole life away. The writing is on the wall act rationally or take the Dave Ramsey path and whine later about “these damn kids these days!”
I really don't think it would be bad for OP to start paying. I mean we have started to see ~75k be thrown around as the income for debt repayments and it it is anything like the stimulus it will probably be phased out around 100k in earnings. If you don't get something in the midterms I would expect to foot most of the bill
I'm never paying a penny of it. The bubble is too big. If people want to pay, they can go right ahead. This is becoming a moral hazard situation and I'll take full advantage rather than live like a crumb for my time on this earth.
At core, I agree with you - we are on the brink of something happening with student loan forgiveness. But I think you're overestimating exactly how much forgiveness there will be. If you look at the statistics, $10k in forgiveness wipes out all debt for something like 30% of student debt holders as well as helping quite a few more. And that is why that number gets thrown around so much; it is very, very likely to be in the $10k range from Biden. Plus, there is likely to be forgiveness tied to income/job outlook which means that most people in this field (and a lot of others) will be not have their loans forgiven, you likely won't qualify.
So, if you don't want to pay them, that's on you. But I think the more reasonable (likely) approach would be to pay down everything but the last $10k.
Biden's forgiveness will be the first of many.
I don’t think it will be forgiven. Look at healthcare, that’s a problem that everyone’s known about yet it still isn’t fixed.
A. We have a right wing Supreme Court that will is going to be right wing for a while, and that isn’t afraid to do unpopular things. So any executive order has a high chance of being struck down.
B. We have a senate with the filibuster. That means most bills are 60 senate votes to pass, and the president’s party generally loses the midterms after getting elected.
C. Most recent welfare programs are means tested. High earners didn’t get Covid bucks, they most likely won’t get student loan forgiveness either.
My philosophy was to pay it down to a balance you can cover for 6 months with emergency funds, then pay minimum. Likely some forgiveness coming at some point, best to take advantage. Also consider your interest rates. Ie. If you need a car and take a loan you should have a higher rate so make extra payments on the car note. Pay your CCs off first (given).
A little different approach with SLs as you probably have a bunch of smaller loans making up the whole balance. Pay the smallest balances first as each balance you pay down reduces your monthly payment, meaning you can pay additional principal elsewhere. Especially since most of the loans can be paid off within 2-3 months each. That extra principal is a better advantage than lower interest imo. It’s also cathartic to have one less loan.
Personal finance is personal. Don’t worry about being optimal. The best plan is one you stick to.
This was very helpful, thank you
If they’re federal and/or at a low interest rate, continue to not pay or pay the minimum. If long term inflation is at ~5%+ and long-term market gains give you 5%+, then low interest debt is essentially getting inflated away. I still have a mid-five figure private loan, but it’s 15 years at 3%, as I refinanced a couple years ago; I’ll gladly pay the minimum on that until I’m in my 40s.
I assume refinancing right now would not be a good idea with the current interest rate environment?
It depends, is your current loan floating or at an interest rate higher than what you can get today? Then it might make sense to refi into a fixed instead of just waiting for the Fed to raise rates even more or refi into a lower rate.
Graduated with 27k in federal loans. Most tokens were in the 3-4% range, one was 6.5%. I paid off the 6.5% one immediately, but have been paying the minimums ever since (or not paid during covid forbearance). My aggregate interest rate is 3.9%, so why bother being aggressive on those when inflation is 8%+?
Still have something like $17k. Less than my emergency fund. Will likely keep paying minimums. I do not at all support loan forgiveness- I think it's a horrible policy. But I'll be damned if I pay off my loans (after working my ass off in college to keep my loans to only 27k) and everyone else gets forgiveness when they took out 100k and partied their way though college without working summers and student jobs.. only to graduate and work as a barista or teacher and pay near zero in taxes.
I did not have any student loans but my wife borrowed a lot of money to go to law school. We paid it off over time. I do not know much about the plan for forgiveness but I would factor that into a plan for repayment.
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